No Tax Treaties for Foreign Aggressors Act
- Bill Number
- S. 2646
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 1
- Policy Area
- International Affairs
- Status
- Introduced
- Latest Action
- 2025-08-01: Read twice and referred to the Committee on Foreign Relations.
- Last Updated
- 2026-04-02T17:53:15Z
AI-Generated Summary
Purpose of the Legislation
This bill, titled the "No Tax Treaties for Foreign Aggressors Act," aims to end a specific tax treaty between the United States and the People's Republic of China (PRC) if China's military, the People's Liberation Army (PLA), starts an armed attack on Taiwan. The goal is to impose economic consequences on China for aggression toward Taiwan by terminating benefits under the treaty.
Key Provisions
- Trigger for Termination: The President must notify the Secretary of the Treasury if the PLA initiates an armed attack against Taiwan (officially the Republic of China).
- Notification to China: Within 30 days of the President's notification, the Secretary of the Treasury must send written notice through diplomatic channels to China, invoking Article 28 of the treaty to terminate it.
- Targeted Treaty: The bill applies to the United States-People's Republic of China Income Tax Convention, signed in Beijing on April 30, 1984, and effective since January 1, 1987. This treaty reduces or eliminates double taxation on income for individuals and businesses between the two countries.
- Congressional Reporting: The President must inform two Senate committees—the Committee on Foreign Relations and the Committee on Finance—in writing about any such termination.
Significant Changes to Existing Law
- This introduces a conditional mechanism to automatically terminate the 1984 tax treaty based on a military action, which does not currently exist in U.S. law. Previously, treaty terminations required separate executive action or congressional approval without this specific trigger tied to Taiwan.
Potential Impacts
- On Government Agencies: The Treasury Department would handle diplomatic termination notices, potentially straining U.S.-China relations. The President and State Department would need to monitor and verify any PLA actions against Taiwan.
- On Citizens and Businesses: U.S. individuals, companies, and investors with income ties to China could face higher taxes due to the loss of treaty protections against double taxation, increasing costs for cross-border activities like investments or trade.
- On International Relations: This could escalate tensions between the U.S. and China, signaling strong U.S. support for Taiwan's defense. It might affect broader economic ties and prompt retaliatory measures from China, such as changes to other bilateral agreements.
Main Stakeholders Affected
- U.S. Government: Executive branch (President, Treasury, State Department) for implementation; Senate committees for oversight.
- Chinese Government and Military: Directly targeted through treaty termination if the PLA acts against Taiwan.
- Taiwan: Indirectly benefits as a deterrent to potential Chinese aggression.
- U.S. and Chinese Businesses/Individuals: Those relying on the tax treaty for reduced withholding taxes on dividends, interest, royalties, or other income flows between the countries.
- International Investors: Could face uncertainty in U.S.-China economic relations, impacting global trade and investment.
Notable Legal, Constitutional, or Political Implications
- Legal: Relies on the President's authority under the treaty's Article 28 for termination, but ties it to a specific foreign policy trigger, which could raise questions about executive discretion in verifying an "armed attack." No court challenges are anticipated in the bill, but implementation might involve diplomatic interpretations.
- Constitutional: Aligns with Congress's treaty powers (Article II, Section 2) and foreign affairs authority, as the bill directs executive action while requiring congressional notification, balancing branches of government.
- Political: Positions the U.S. firmly against Chinese military action toward Taiwan, potentially influencing bipartisan foreign policy on Asia-Pacific security. It may face debate over economic fallout versus strategic deterrence, especially given the bill's introduction by senators from both parties.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (3)
Sen. Coons, Christopher A. [D-DE], Sen. Cassidy, Bill [R-LA], Sen. Cortez Masto, Catherine [D-NV]
Recent Actions
- 2025-08-01: Read twice and referred to the Committee on Foreign Relations.
- 2025-08-01: Introduced in Senate
Bill Versions
- No Tax Treaties for Foreign Aggressors Act — issued 2025-08-01 — PDF (2 pages)